Economist 5/20/16

  1. IN THE 1990s, following the collapse of the Soviet Union, the Russian government under President Boris Yeltsin sold off state-owned assets at cut-rate prices to a group of well-connected Russian businessmen.Drawing on annual rankings of the world’s billionaires by Forbes, the study finds that from 1996 to 2008, the number of Russian billionaires increased from zero to 87. Collectively, these individuals had a net worth of over $500 billion in 2008 (in 2015 dollars) with the majority deriving their wealth from oil, gas, coal, metals, and finance.In 2009, in the aftermath of the financial crisis, nearly two-thirds of Russia’s billionaires fell off the Forbes ranking. In 2015, as oil prices fell by half, 23 Russians lost billionaire status.Among the Germans who joined Forbes’ billionaire rankings between 2011 and 2014, 97 percent were still on the list in 2015. Among Russians, the corresponding figure was just 43 percent.
  2. THE job of secretary-general to the UN is something of a poisoned chalice. The only one of its eight holders to date who is widely admired is Dag Hammarskjold, a Swede who died in an air crash in 1961, trying to end the first of post-independence Congo’s horrors. Kofi Annan, a shrewd and charming Ghanaian who held the post in 1997-2006, is seen as next best, despite patchy success in the world’s trouble spots. South Korea’s Ban Ki-moon, his outgoing successor, is viewed as the dullest—and among the worst. In Mr Ban’s defence, he is decent and dogged. He can claim some credit for new development goals set last year and for overseeing a climate-change agreement in Paris in December. But he is painfully ineloquent, addicted to protocol and lacking in spontaneity and depth.Overall Mr Ban personifies the defect to which the UN is prone: plumping for the lowest common denominator. He got the job because none of the permanent members of the Security Council—America, Britain, China, France and Russia—found him too objectionable.
  3. UN-watchers say there is almost a consensus that Mr Ban’s successor should be an eastern European woman—because no one satisfying either criterion has ever been chosen.At some point, presumably, a sufficiently inoffensive woman from the favoured region could be found. However, nine candidates (seven from eastern Europe, of whom three are women) have broken with precedent by declaring their candidacy rather than lobbying behind the scenes.The UN can only be as effective as the warring parties or the big powers permit. But its boss matters because, for all its faults, the UN is the last resort when chaos breaks out.The secretary-general is also the UN’s “chief administrative officer”. In this respect, too, under Mr Ban it has floundered.Budgets for peacekeeping and other missions were sloppily drawn up and poorly supervised.Hiring is often political rather than on merit. Informal regional quotas often entrench the incompetent and even the corrupt.Poor countries do not want the administration streamlined or the budget squeezed: they do not pay for the UN and many see it as a gravy train which gives their people cushy jobs.
  4. Times are tough for America’s department stores. This month Macy’s, Kohl’s, JC Penney and Nordstrom all reported slumping sales.In 2011 the online retailer accounted for 1.4% of American sales of clothing, handbags and shoes. Next year Cowen, a financial services firm, expects it to overtake Macy’s as America’s top seller of apparel. Shoppers like the Amazon’s huge selection (about 19m items), easy shipping and partnerships with brands such as Adidas.Cowen expects even TJX’s clothing sales to be less than half of Amazon’s by 2020.
  5. WHEN DuPont and Dow Chemical agreed to merge in December, the $130 billion deal seemed to be a prime example of American managers’ ruthless pursuit of shareholder value and dedication to building monopoly positions.What has become clearer since then is that Dow-DuPont is also part of a global trend: a wave of consolidation in the agricultural seeds and chemicals industry. In February ChemChina, a state-owned Chinese firm that has been on a buying spree, agreed to pay $43 billion for Syngenta, a big Swiss firm that specialises in selling chemicals to farmers. This week Monsanto, an American seeds firm valued at $42 billion, confirmed that it had received an unsolicited takeover approach from Bayer, a pharmaceuticals and chemicals concern that is one of Germany’s biggest firms by market value.Three trends explain the surge in activity. First, a slump in sales: the agricultural-product industry’s top line, growing at 2% in 2014, fell by 10% in 2015. With crop prices low, farmers are spending less. Second, bosses think that selling bundles of products to farmers will be more profitable in the long run.The third trend is specific to Syngenta: China’s government wants to modernise its farms and to own the intellectual property involved, for example seed patents.Often the grand themes used to justify deals make some sense, but the numbers don’t add up. The present binge already looks alarming.

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